Alternative ways to practise as a solicitor have had “modest impact”

SRA: Solicitors generally happier with the STaRs

The options for solicitors to offer services to the public as freelancers or from unregulated businesses have had a “modest impact on consumer choice”, research for the Solicitors Regulation Authority (SRA) has found.

There has been relatively limited take-up of both and the Centre for Strategy and Evaluation Services (CSES) said the regulator should consider raising their profile.

CSES was asked to carry out the ‘year three’ evaluation of the Standards and Regulations (STaRs), the new approach to regulation that came into force in November 2019.

It surveyed 1,772 solicitors and 1,000 consumers, supplemented by dozens of in-depth interviews.

The evaluation did not identify any significant issues for consumers, the profession or the legal services market resulting from the STaRs.

Law firms and individual solicitors reported that the codes of conduct and updated principles have made it easier for them to do business and were less burdensome compared with the previous SRA Handbook, although a minority of solicitors “remain dissatisfied with the move from a prescriptive approach and concerned about future risks”.

Linked to this, a minority thought this had led to “an inconsistent or inappropriate approach to enforcement”.

“Key issues include the risk of enforcement action being taken in relation to conduct not related to professional practice, enforcement actions not focusing on the most serious breaches, delays in completing investigations and the risk that solicitors of limited means accept findings against them that they would otherwise have challenged due to not being able to recover any legal fees in the event that they are exonerated.”

CSES said the SRA should review its enforcement actions, “if only to reassure” this minority.

Nine in 10 consumers were informed their provider was regulated and 52% understood the overall protections very or reasonably well.

The number of freelance solicitors continues to increase steadily from around 300 after the first year to 650 at the start of 2024.

“This trend would appear to demonstrate that operating as an SRA-regulated freelance solicitor is an increasingly attractive practising model. However, anecdotal feedback suggests that the challenge of obtaining professional indemnity insurance remains a barrier to pursuing this route,” CSES said.

Compared with the overall population of practising solicitors, freelance solicitors were more likely to be male (61% versus 48%) and older (51 years v 44) but less likely to be white (70% versus 81%).

The main reasons for going freelance were to operate more flexibly, gain more independence and a better work-life balance. A minority combined it with working in-house or being a consultant to a law firm.

Three in 10 freelancers surveyed moved into the role from one where they were not advising the public directly, meaning they were widening provision in the market. There was no evidence of increased risk to consumers, with low levels of complaints.

Of the 183 solicitors surveyed who worked at an unregulated firm, only 21 (12%) said their businesses offered services directly to the public. But it has made it “considerably easier” for some providers to do business and compete with law firms and with non-solicitors.

“Moreover, the survey evidence shows a small number of law firms shifting part of their business into non-regulated entities. Possible barriers to the expansion of this form of provision include low levels of awareness of the possibility to practise in this way and low levels of understanding and awareness of the relevant rules.”

Some were put off by the administrative burden it might entail while others feared damage to the firm’s reputation and branding. “For some of those in SRA-regulated firms, this step could potentially compromise professional standards and diminish the standing of solicitors.”

CSES noted that freelance solicitors and non-regulated providers “are seen by consumers and solicitors as offering a price advantage over law firms”, but they were not yet sufficiently widespread to have an effect on prices across the market.

“There is also some evidence that freelancers are providing better access to solicitors for less well-off consumers. For example, the survey of consumers showed that those with a household income of less than £20,000 were more likely to use freelance solicitors than law firms.”

Challenges remained around consumer awareness of the status of different types of provider outside of traditional law firms and the protections available to them – only seven of the 51 consumers surveyed who had used a freelance solicitor knew it did not offer the same protections as a law firm.

CSES said the SRA should consider “additional communication efforts to increase awareness of and understanding of the possibility for solicitors to provide services to the public via non-regulated entities”, and take steps to increase solicitors’ understanding of the freelance role.

It should also explore the possibility for freelance solicitors to provide immigration and claims management services, which they are currently unable to do for regulatory reasons, and allow them to add the SRA clickable log to their websites.

In other findings, the research identified “very limited take-up” of third-party managed accounts as an alternative to client account, consumer support for “more and better price comparison websites”, and that consumers had high levels of satisfaction with the quality of service across all types of provider.

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